Chips, Juice and Airplanes - Exemptions Confuse as Tariffs Kick In
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Tech stocks gain after President Trump exempts firms including Apple from 100% levies on chips. But confusion reigns as reciprocal tariffs kick in for US trading partners around the world. And we look at just how many billions of dollars the trade war is costing everything from automakers to the poorest countries.
The U.S. is the number two trading partner after China. China doesn't really need Indonesian shoes. They do buy some, but they make a ton of their own shoes, right?
It's Thursday, August the 7th. I'm Azhar Sukri for The Wall Street Journal. Here is the AM edition of What's News, the top headlines and business stories moving your world today. Tech stocks are gaining after President Trump last night announced 100% tariffs on chips and, to the relief of companies like Apple, exemptions for tech firms that invest in the US. Apple CEO Tim Cook yesterday promised to invest an additional $100 billion in the country. That's on top of the $500 billion pledge Apple made in February. Here's the president.
As you know, Apple's been an investor in other countries a little bit. I won't say which ones, but a couple. And they're coming home. $600 billion. It's the biggest there is. The company is also unveiling its ambitious new American manufacturing program, which will bring factories and assembly lines across our country all roaring to life, areas that were not doing so well are doing very well.
How did the new chip tariffs and Apple exemptions move markets overnight?
Journal finance editor Alex Frangos says markets, and not least, tech companies, are taking the announcements in stride.
There's a lot left to play for, but the investors seem to be welcoming the bon ami between the big tech companies and Trump. There's this feeling that at the top level, Trump is throwing out these tariffs, but underneath it, he's making life palatable for everyone. And so, you know, you see markets not freaking out. Apple shares were up early this morning after this news. So it seems right now people are kind of digesting the whole thing.
The levies on chips come ahead of sweeping new tariffs that went into force today. That includes a 50% levy on imports from India and Brazil, near 20% tariffs on Southeast Asian countries, and a 15% rate on most industrialised economies like Japan and the EU. But as Alex explains, carve-outs and exemptions like the one Apple received are causing confusion.
The dust has definitively not settled. There was going to be a big tariff on copper, and Chile, one of the world's biggest copper producers, said, hey, maybe just do that on copper products, not raw copper. He slapped very high tariffs on Brazil. Brazil makes a lot of orange juice that Americans drink, makes a lot of airplanes that Americans fly in. convinced that those should be exempted as well. The EU is in talks to try to carve out spirits so your Negronis can not be extra taxed and things like that. So there's this baseline or kind of ceiling of tariffs around the world, but underneath it is kind of a Swiss cheese of exemptions and carve outs. And the signal seems to be there will continue to be more and more of those sorts of things negotiated.
And it's not just chip makers that are feeling the brunt. A journal tally of this earnings season reveals that the trade war has inflicted almost $12 billion in losses on global automakers. Just this morning, Toyota said tariffs reduced its operating profit in the second quarter by $3.1 billion. the largest bill reported by a carmaker to date. And as Auto's reporter Stephen Wilmot explains, this may just be the beginning of a painful reshaping of the industry.
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